On the Money – Inflation hits its highest level in decades

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Happy Wednesday and welcome to On The Money, your nightly guide to everything related to your bills, bank account, and bottom line. Subscribe here: thehill.com/newsletter-signup.

Today’s Big Deal: Consumer prices rose 7 percent for the year ending December in the biggest increase since 1982, according to Labor Department data. We’ll also look at a recent report detailing the major issues that plagued millions of taxpayers last year and concerns ahead of the next tax filing season.

For The Hill, I’m Aris Folley, replacing Sylvan Lane on the finance team. Write to me at [email protected] Where @ArisFolley. You can reach Sylvan at [email protected] Where @SylvanLane.

Let’s go.

Inflation at its highest since 1982

Consumer prices rose 7% for the year ending December, an increase the Labor Department said was the highest since 1982.

The department’s consumer price index (CPI), which measures inflation for consumer goods and services, rose 0.5% in December alone, an even smaller jump than the previous two months.

  • Officials called price increases for used shelters, cars and trucks “the major contributors to the seasonally adjusted increase for all items.” Rising food prices were also flagged in the latest report as a notable contributor to inflation, although its 0.5% rise last month was lower than in recent months.
  • Prices for home furnishings and functions, clothing, new vehicles and medical care also rose in December, while prices for auto insurance and recreation fell, similar to the previous month. Energy prices fell 0.4% in December after a series of increases. Gasoline and natural gas prices also fell.
  • The new inflation report adds to a list of challenges President Biden faces as his administration has sought to tout the economy’s great progress as part of the country’s ongoing pandemic recovery from the pandemic. to rising prices.

Biden said the latest inflation data shows his administration “is making progress in slowing the rate of price increases,” but acknowledged more work is needed to cut costs for American families.

“Inflation is a global challenge, appearing in virtually every developed country as it emerges from the pandemic economic crisis,” Biden said. “America is blessed with one of the fastest growing economies, thanks in part to the US bailout, which allows us to weather price hikes and maintain strong and sustainable economic growth. This is my goal and I strive to achieve it every day.”

The Biden administration has taken steps to ease supply chain bottlenecks at ports and with trucks to reduce costs.

Morgan Chalfant of The Hill has more here.

LEADING THE DAY

IRS watchdog ‘deeply concerned’ about upcoming filing season

National Taxpayer Advocate Erin M. Collins, head of the IRS’ internal watchdog, has raised concerns about the upcoming filing season in the recent report of his office detailing the major issues that plagued millions of taxpayers last year.

“There’s no way to water down 2021 in tax administration,” Collins wrote in his office’s 2021 annual report to Congress, which was released early Wednesday. “The year 2021 has not been short of taxpayer issues.”

  • The report found that tens of millions of taxpayers experienced delays in processing returns, many of which it said “translated directly into delayed refunds” as less than 80% of individual taxpayers received tax returns. refunds.
  • He also found that “[t]The imbalance between the IRS’s workload and its resources has never been greater,” given the agency’s dwindling workforce over the past decade or so, despite its significantly increasing workload. of work.
  • A breakdown of the agency’s backlog at the end of last month found the IRS had 6 million original unprocessed individual returns, 2.3 million unprocessed amended individual returns, more than 2 million quarterly tax returns from unprocessed employers and almost 5 million pieces of correspondence from taxpayers.

While Collins noted that her report “focuses primarily on 2021 issues,” she said she was “deeply concerned about the upcoming filing season,” before going on to call the paper “the Kryptonite of the IRS”.

In addition to the challenges faced by taxpayers and the agency last year, the report also provided a list of dozens of legislative recommendations, ranging from providing more funding to the IRS to improving operations, extending the receiving refunds when the agency extends the tax filing deadline and authorizing the office to implement minimum standards for federal tax preparers.

I have more here.

STUDENT LOANS

Pressure aligns with Biden and Democrats to cancel student loans

Lawyers and lawmakers are stepping up the pressure on President Biden to act on student loan forgiveness, focusing on that as a major issue that some savvy Democrats could pay off at the polls in the upcoming midterm elections.

Biden has been called on to work with Congress on the issue and provide more transparency about his authority to wipe out all federal student debt from millions of Americans. The latest extension of the student loan repayment pause amid record spikes in COVID-19 cases has made advocates optimistic about more White House action coming out.

“I think the administration needs to engage more with Congress on this because I think there’s a real concern,” the senator said. Bob CaseyRobert (Bob) Patrick CaseySenate Democrats lose faith in Manchin Senate Democrats demand info on nursing home boosters Senators demand federal inquiry into Liberty University’s handling of sexual assault claims MORE (D-Pa.) told The Hill.

Read more here from me and Alex Gangitano from The Hill.

WEALTH GAP

Pandemic reverses gains in global wealth gap: report

Coronavirus pandemic undoes gains that had been made in global wealth gap, says a report by the World Bank.

The World Bank has found that income inequality around the world has increased amid the pandemic, undoing some progress made over the past 20 years.

The report says the pandemic has increased extreme poverty rates and disproportionately affected low-income populations.

The Hill’s Lexi Lonas has more here.

Good to know

According to a new report.

Here’s what else we’ve got our eyes on:

That’s all for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. Well see you tomorrow.

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